Archive for Category 'personal bankruptcy Canada', page 3

Question: I am a Canadian citizen who returned last year to Canada after living many years in the US. When living in the US I incurred debt both secured and unsecured, with my husband. Now we are separated, can I declare bankruptcy in Canada even though most of my debt is in the US? And can I do it separately from my husband who remains in the US?

Answer: Yes, you can declare personal bankruptcy in Canada separately from your husband.  However, that may not be the best strategy.

If most of your debts are in the U.S., and you are living in Canada, it is unlikely your American creditors will pursue you in Canada.  First, they probably don’t know where you are living in Canada.  Second, it’s costly for someone in one country to pursue you in another country.

Also, while a Canadian bankruptcy discharges your debts, if you were to return to the States to work, your American creditors would ignore your Canadian bankruptcy, and pursue you for collection.  Therefore, the best strategy may be to simply pay your Canadian debts, and ignore your American debts until they pursue you in Canada, or until you return to work in the U.S.

Question: My husband and I owe $96,500.00 in unsecured debt, and an additional $40,000.00 in secured debt. We do not own our own home, we rent.
We have never missed a payment nor have we ever been late on a payment. But we work to pay our debts. There is no money left over. Only the minimum is paid on our bills each month so we aren’t getting anywhere.
What would you recommend?

Answer: You have five choices.

1. Keep working hard, cut your expenses, and use whatever money have to pay off your debts, starting with the highest interest rate debts.  If you can only afford minimum payments, this startegy won’t work.

2. Get a consolidation loan from a bank.  If you have good credit, you may be able to consolidate your unsecured debts at a lower rate of interest, so that more of your payments go towards principal, and you repay your debts faster.  However, it is unlikely a bank will lend you $96,5000 with no collateral.

3. Do a Debt Management Plan through a non-profit credit counsellor.  To repay $96,500 over a 5 year period would cost over $1,600 per month, so credit counselling only works if you can afford it.

4. File a consumer proposal through a licensed trustee in your area.  In most consumer proposals you are able to repay less than the full amount owing, so in your case it may be possible to pay, say, $500 per month for three to five years to eliminate your debt.  Certain rules apply, but if your debts are joint with your husband, this may be a good option.

5. The final option is personal bankruptcy.  Bankruptcy eliminates your debt, but the payment you are required to make each month is based on your income.  The higher your income, the more you pay, so this may or may not be the correct option.  For more information, contact a licensed trustee in your area. 

There are options, so we strongly suggest that you investigate your options, and decide on the solution that’s right for you.

Question: A little over a year ago, I leased a brand new car but things have changed and I can barely afford it now. Back when I leased the car, with some cash down and my old car as a trade-in, the monthly lease payments were brought down to $235 a month for the 4 year lease. Insurance costs me $135 a month (and cannot be reduced or removed, as per the lease agreement), for a total of $370 per month. At the time, I could easily afford it.

Now I can barely afford it and I just lost my part time job, so things are not looking any easier. I want to just drop it off at the dealership and walk away from it. My credit rating is already an R9, so I don’t care if it hurts my credit rating (or is there something worse that could happen)?

I know there’s a company that matches up people looking to get out of a lease with people looking to take over a lease, but that could cost me a month or two worth of payments while, or if, someone can be found to take over the lease. The car has the less desirable manual transmission – most people want automatic, so I could be stuck with the car for a while. I’m not sure if I can hold out until things get better financially. It’s been a challenge for the last few months and now, short of a lucky turn of events, will be even harder. If I fall behind in my lease payments, the car will be repossessed. Would it be so bad if I just voluntarily gave up the car instead?

I’m thinking of going on a debt management program. Would I probably get slammed with an early termination penalty (whatever that might be). Or on a DMP, is it possible that they would go easier on me?

Answer: In general, if you sign a car lease you are responsible for the payments.  If you are not able to make the payments and you voluntarily surrender the car, the leasing company will take the car and sell it, and apply the proceeds to the balance owing on the lease.   For example, if you have three years owing on your lease at $235 per month, you owe $8,460 on the lease.  If the leasing company sells the car for more than $8,460 (after selling expenses), you will owe nothing.  However, if they only get $5,000 when they sell the car, they would pursue you for the remaining $3,460 owing.

The decision for you is this: if you think you will be working soon and will need the car, it may be best to try to keep it.  You could call the leasing company and ask them to defer a month’s payment to help you out.  On the other hand, if you are sure you cannot afford to keep it, you should ask the leasing company what will happen if you return it.  If you know you will lose a lot of money, then exploring one of those companies that matches people wanting to lease with people wanting to get out of a lease may make sense.

Ultimately, if you do suffer a shortfall on the car, a debt management program may be able to deal with the debt.  If you cannot pay the debt yourself, other options may be a consumer proposal or personal bankruptcy.

Question: I’m sure this is nowhere near as complicated as it seems to me:

I am the owner of a small corporation that earns about 125K annually. I am currently running the business out of my apartment and so the phones / internet that I need for business are in my home. Through the corporation, I lease a car.

The corporation has one major loan (approx 15K left to pay to American Express Bank by end of August 2008. We have never been late with that payment). Other than that, it owes some small debt (approx 10K). Some of that is to Revenue Canada. Some is to a business MasterCard. Unfortunately, half of that amount is owed to an accountant who filed my 2005 taxes and who has been patiently waiting since. Just to complicate this, I have not filed my 2006 taxes (corporate or personal) because I can’t ask for more service from someone who hasn’t been paid for the last service he provided (and I don’t know how to do it myself). At present, Revenue Canada is demanding I file….or else.

Personally, I owe about 10K in Student Loans (6500 of which is in collections). I also have about 60K in credit card debt. And, Revenue Canada would like 3000 from me in back taxes.

I currently am overdrawn at the bank (900) and have only $200 left in RRSPs.

I have reservations about declaring bankruptcy for debt I incurred; it’s no one else’s fault. As well, I understand that, as the director of a corporation, I cannot be bankrupt.

On the positive front, although the summer months are tough on us historically, the business is picking up and doing all right. I just moved the business to the city in which I currently reside 22 months ago and started “fresh”. So, I have no doubt I can make this work.

Here’s the problem I don’t know how to solve:

1) I need the car and phones to do the only work I know how to do (on the road consulting).

2) I need the point of sale machine to ensure cash flow regularity so I can pay bills, the consultants who subcontract, and occasionally, myself.

3) I am currently heading into the second month of delinquency on all personal credit card debt and the business MasterCard.

4) If I file a credit proposal, must I include the business debt since, as director, I am co-signer on those accounts?

5) I need some time. And I need some relief from the interest on personal credit card debt. How can I buy time / reduce payments etc. on the personal debt without compromising the business and my ability to make an income from it?

Thanks, firstly, for the investment of your time to read this long description. And then thanks, in advance, for any wisdom you might impart.

Answer: Your situation is complicated, because you have both personal and corporate debts.

If you believe the business is viable, then there are a number of strategies to keep the business active.  If you end up filing personal bankruptcy, it may be necessary to have a friend or relative start a business that you would then operate on their behalf while bankrupt.

The timing makes your situation more complicated.  If you believe the business will show rapidly increasing cash flow, then “hanging in there” for the next few months may be your best option.  However, given your debt levels, you may not be able to earn your way out of debt.

Since there are many variables to consider, we strongly recommend that you consult a bankruptcy trustee and have them walk you through all possible resolutions to your situation, so that you can make an informed decision as to which course of action is best for you in the long term.

Question: I am a single parent putting my son through to be an engineer. In 2005 after 9 years in a law suit, I was awarded 112,000.00 of which I received 63,000.00. I assumed that the insurance firm had deducted taxes. Not so…I now owe Rec Can 31,000.00., my credit card debt is also very high apx. 25,000.00, and my secured line of credit and mortgage is 112,000.00. My home is valued at apx 120,000.00. My monthly income consists of CPP disability of 900.00, LTIP of 643.00 and $200.00 spousal support and 700.00 child support, totaling 2443.00. If I declare bankruptcy, will I lose my home or do I just continue to pay my mortgage and line of credit payments and declare bankruptcy on my other unsecured debts?

Answer: The answer depends on the value of your home.  If you declare personal bankruptcy and there is no mortgage on your home, then yes, it is likely that you will lose your home.  However, if there is a mortgage on the home such that the amount you owe is approximately the same as the value of the home, you will probably be able to keep your home, provided you continue to pay your mortgage.

There are a number of factors to consider when making this decision, so we suggest you consult a licenced bankruptcy trustee to review your situation before you decide on the appropriate course of action.